[James]

With regards to immigration and the challenges they face, here is a link to a report called The Working Poor in the Toronto Region by the Metcalf Foundation. I'm not sure if this report was linked elsewhere in this forum but it came out in 2012.

http://metcalffoundation.com/wp-con...ing-Poor-in-Toronto-Region-Summary-Report.pdf

Excerpt:
The working people you pass on the way down this long, underserviced corridor pay
their taxes and work just as many hours as other working people do, but they work more
in the service sector. They are, on average, just about as educated as other workers, but
they make less money. They are a little younger than the average Canadian worker and
more of them are single. They tend to be renters, rather than homeowners. An overwhelming
number are immigrants.

These are the working poor.

 

[DarnDirtyApe]

I must say, that report is pretty lacking in substance, perhaps written by someone who has no clue as to the actual reality of the situation. Guess what, paper credentials are different than actual job skills, and our economic system is set up such that people can get paid roughly in accordance with the value of their human capital. Some people just don't have much value to the labour market...

 

[Glen]

Sure it does - that service work is only low paying because there is a huge oversupply of unskilled workers. Reduce growth in the unskilled labour force and you will find that wages will naturally creep up as employers have to pay more to stop employees from jumping to other jobs. Or, those jobs will disappear because the value of the work is less than the market rate for labour.

There's nothing about our tax and welfare system that favours the wealthy, other than that the government limits itself to taking 50%. The problem is that there are too many people with no job skills for a modern economy.

That sound like it came straight from the the Tea Party or the GOP.

If service work is low paying due to a supply / demand imbalance, why would an increase in 'higher skilled' employees not reduce wages in those areas as supply increases? And the idea that there is nothing in our tax system that favours the wealthy is absurd. Capital Gains are taxed and at 50% of the marginal rate. Capital Gains on principal residences are exempt from taxes. RRSPs are tax deductible if you are fortunate enough to have the ability to save. Property taxes favours homeowners over renters. The list goes on and on.

 

[DarnDirtyApe]

That sound like it came straight from the the Tea Party or the GOP.

If service work is low paying due to a supply / demand imbalance, why would an increase in 'higher skilled' employees not reduce wages in those areas as supply increases? And the idea that there is nothing in our tax system that favours the wealthy is absurd. Capital Gains are taxed and at 50% of the marginal rate. Capital Gains on principal residences are exempt from taxes. RRSPs are tax deductible if you are fortunate enough to have the ability to save. Property taxes favours homeowners over renters. The list goes on and on.

It would, but that would reduce inequality which is presumably the point here.

The working poor pay almost nothing in income taxes, and benefit from a number of tax credits (Ontario Trillium benefit, and so on). Our tax system is quite progressive, and basically anyone making over $70-80K per year is considered wealthy and subject to a surtax in Ontario. Capital gains are taxed at a lower rated because part of that gain includes inflation, and because companies already pay taxes (albeit at a lower rate) on retained earnings.

More importantly, even if government took 100% of the money held by those considered wealthy, it wouldn't make a dent in average well-being. There just isn't enough money to go around.

 

[TrickyRicky]

There are things that can be done to reduce income inequality but they all require fundamental philosophical shifts in our culture. Also, size matters. It is harder to achieve income equality in a large city with a dynamic population. If you have a smaller city and a more stable population, income inequality is easier to address.

Most solutions to dealing with income inequality and underemployment in my opinion mean reducing freedoms. When people are free, society will naturally segregate. You cannot stop this phenomenon. What you want is to give the most opportunity to those not prospering under our system.

For starters (which means it will never happen) we need to re-think the Anglo-Saxon confrontational culture. Our politics, corporate culture, labour movements, legal system etc. need to shift from a confrontational rights based paradigm to a collaborative responsibilities paradigm. Japan could be an example of a more responsibility based society. I'm not holding up Japan as an ideal, their culture has just as many problems, but they certainly have less inequality and not coincidentally far fewer lawyers.

I think discussions about taxation might have some influence but tax is not an important factor in the existence of income inequality or problems of inequality.

I would favour a Swiss like educational model where university enrollment is curtailed to only the top few percent of students. All other people would be put in apprentice streams. These apprentice streams are not just technical in nature but include white collar office workers. Industry and companies would be forced to take on and train apprentice stream candidates. They would not be forced to hire their apprentices in the future but they would be bared from discriminating on the basis of gender, ethnicity, new immigrant etc. Apprentice stream students would be ale to go on to university and professional careers but only after completing their apprenticeship and if they then qualify.

 

[Admiral Beez]

So, in summary you want to:

Most solutions to dealing with income inequality and underemployment in my opinion mean reducing freedoms. When people are free, society will naturally segregate. You cannot stop this phenomenon.

and

need to re-think the Anglo-Saxon confrontational culture. Our politics, corporate culture, labour movements, legal system etc.

These are two founding tenants of the country. Everyone gets the freedom to do what they can with the skills, abilities and luck they bring to the table, and the allowance to (within the law) gain and lose at others' expense. Canada is a very Darwinian nation in many respects, where if you want more income, you've got to work for it, accepting that the system is already rigged to favour those with privilege or other head starts. For example, not all immigration is created equal - when my family arrived from the UK in the 1970s we had the language, culture and immediate acceptance of foreign credentials (education and experience) to make a near seamless integration into Canada's success cultural tier. Today's immigrants often arrive to different circumstances, further impacting income polarization.

I'm likely painting a dark picture for our younger idealistic UT'ers.

 

[Palma]

So, in summary you want to:



and



These are two founding tenants of the country. Everyone gets the freedom to do what they can with the skills, abilities and luck they bring to the table, and the allowance to (within the law) gain and lose at others' expense. Canada is a very Darwinian nation in many respects, where if you want more income, you've got to work for it, accepting that the system is already rigged to favour those with privilege or other head starts. For example, not all immigration is created equal - when my family arrived from the UK in the 1970s we had the language, culture and immediate acceptance of foreign credentials (education and experience) to make a near seamless integration into Canada's success cultural tier. Today's immigrants often arrive to different circumstances, further impacting income polarization.

I'm likely painting a dark picture for our younger idealistic UT'ers.

The most barrier is lack of the English language. If you do not have command of the language you cannot blame companies for not hiring them. Although the government sure seems to hire them enmass. Jobs that Anglo Saxon Canadians have a harder time of getting. Is that fair? At least these government jobs are high paying so these immigrants have an advantage.

 

[Memph]

I'm still somewhat unconvinced that income segregation is inevitable. Or at least for it to get worse than it currently is. Obviously no-one expects neighbourhoods to be perfectly integrated income wise, but I think they could be more integrated than they are now.

There's basically a couple of forces at work causing income segregation.

1. Gentrification, with much of the high paying jobs being downtown, and the growth of downtown jobs, and probably a higher % of the downtown workers being childless compared to a few decades ago, and growing demand for walkable neighbourhoods, there's more demand for housing in central Toronto. The less that demand gets accommodated in new housing, the more it will be accommodate in existing housing which means lower income and middle class residents have to move out to make way. Allowing more housing, and more types of housing to be built in a greater variety of central neighbourhoods should reduce displacement.

2. Suburban decline - as suburbs age. Reducing the amount of new suburban neighbourhoods built could help existing suburban neighbourhoods. If suburban single family housing is in a tighter supply, the SFHs in the aging suburbs might get more desirable. But I also think allowing a greater range of new housing to be built could help bring in yuppies and middle class families. Also changing business taxes so that the outer 416 is more competitive would help.

 

[Memph]

The most barrier is lack of the English language. If you do not have command of the language you cannot blame companies for not hiring them. Although the government sure seems to hire them enmass. Jobs that Anglo Saxon Canadians have a harder time of getting. Is that fair? At least these government jobs are high paying so these immigrants have an advantage.

Back in the earlier waves of immigration this was less of a problem.

When the Germans, Dutch and Ukrainians were immigrating, they probably did not speak english, but the economy was largely agrarian and it didn't matter much if you were a farmer. Eventually you or at least your kids would learn english but there wasn't too much of a rush.

Then when the Italians and such were immigrating after WWII you still had a lot of factory jobs where you didn't need to be very fluent, just enough to understand relatively simple instructions.

You didn't have to worry about whether your university degree was recognized either, those jobs didn't require one, and could still allow you to build wealth.

Now, if you're an immigrant from somewhere with a different language and without a degree that's recognized, it's more difficult...

 

[Admiral Beez]

Australia has been better than Canada on this score by strictly requiring English fluency of all immigrants and by not having an extended family sponsorship program, meaning you can bring in your kids and spouse once you're settled, but not your non-English speaking parents, cousins, etc. Thus, with just once policy the Australians have eliminated one cause of income polarization.

 

[pman]

These are two founding tenants of the country.

I never knew that. Who was their landlord?

 

[Admiral Beez]

I never knew that. Who was their landlord?

The Crown of course.

You made me chuckle on an otherwise dreary time change, thanks. Tenets it is.

 

[Northern Light]

Obviously, this is a complex issue for which there are many possible responses; and ranges or combinations of responses.

However, at the risk of oversimplification, I will only seek to address a small few.

Many here have raised the notion that this is a supply/demand problem at the low-skill end of the workforce.

Surely, that is partially true.

But we can't re-skill a vast-swath of the workforce all at once; and even if we could, we would surely just end up over-supplying another portion of the labour market, driving its wages down; and not seeing the benefit one might wish.

My first suggestion then would be to take other more subtle action in the market to slightly adjust the labour/job balance.

For instance increasing the minimum paid vacation requirement from 2 weeks (as it is in most provinces except Sask.) to 3 weeks.

Its not a burdensome cost-rise (2% of labour cost); nor does it affect global competitiveness as most countries (the U.S. excluded) have more generous vacation requirements; and further many jobs in this sector (say fast food workers) are not in practice exportable).

Yet, this has the effect in a large retail environment of increasing staffing requirements modestly, thereby shifting the worker to job ratio. It should also have some impact in management and clerical jobs thereby providing some additional upward mobility to lower skill workers.

***

A second thought is that many income pressures result less from the hourly wage that from an inability to secure full-time employment. Many retail employers avoid classifying a worker as F/T in order to avoid triggering benefits (medical/dental).

There are a variety of options here, one is to modify paid break times in law (currently 15 min after 4 hours, 15 more after six and 30min unpaid after 7).........to ensure that hourly employees are treated the same as most salary workers (40 hours of work includes 1 hour of paid break time each day, 5 days per week) more or less.

Minimum hours per shift could also be increased (from say 3 hours to 4)

But we could also look at a modest rise in corporate tax, but off-setting that for most businesses by providing universal prescription drug care; and dental. Thus eliminating a dis-incentive to full-time employees.

****

There are other choices on both the wage an tax side.

On taxes, its less a matter of making them more 'progressive' than removing perverse incentives/disincentives.

For instance the higher property tax rate on multi-residential properties has an effect of around $150 extra in rent for the typical renter.

That amount of relief in 'average' Toronto rents would be very helpful to many lower income families.


As would a move to generally shift away from 'deductions' and 'credits' but increasing the basic personal exemption on which no income tax is paid.


***

Finally, a modest, but real (greater than inflation) increase in the minimum wage would be entirely helpful. The key is not raising so much or fast as to trigger widespread inflation; while recognizing the economic benefits from people w/higher wages spending more in the economy.

Base on various minimum wages in the U.S., Canada, Europe and Australia; I think a reasonable case for a move to around $12.50 per hour, province wide, and slightly higher in the GTA (say, $13.50) would be desirable. Phased in over 2-3 years there would be negligible harm, and material benefit. Those wages are in line with the current proposed New York State minimum wages ($10.50, and $11.50 in NYC) when adjusted for the current exchange rate.

 

[DarnDirtyApe]

For the most part, your suggestions fall on employers, and ultimately customers of those businesses. Higher minimum wages will get passed on in the form of higher prices, or businesses will cut back on hours more aggressively. I do agree that the multi-residential property tax rate is too probably high, but market value based property taxes don't make a whole lot of sense anyway.

 

[Northern Light]

For the most part, your suggestions fall on employers, and ultimately customers of those businesses. Higher minimum wages will get passed on in the form of higher prices, or businesses will cut back on hours more aggressively. I do agree that the multi-residential property tax rate is too probably high, but market value based property taxes don't make a whole lot of sense anyway.

With respect to most of my suggestions falling on employers...

I think first off we need to note any system of any kind, be it through laws, policies, programs or taxes under which anyone in our society gains, they do so through some form of redistribution from another party or parties.

This is what occurs when you buy a product; and the seller makes a profit, they gain, you lose; to be clear, that doesn't mean there's any wrong going on, its a transaction, and each side is extracting value, but in strict $ terms, one side is doing better than the other (if not the business will go broke).

If you are advocating for no redistribution of any kind, arguments of fairness aside, I would argue that would collapse the economy; if not, then the question is not whether to redistribute but rather how, and how much.

**

With that said; I would further beg to differ on the suggestion that I place a burden on employers; a shift towards full-time employment does NOT increase costs, in fact it lowers payroll taxes and fixed costs as fewer employees work at any one business. Any system where people work 2 jobs (or more) for different employers in order to gain enough paid hours to survive is not only inefficient for the worker, but also the employer as each worker has fixed costs not only in taxes and benefits but also in size of a break room, in the complexity and staff hours involved in schedule making etc. I simply suggested that government remove some dis-incentives to full-time employment (like private medical benefits) but uploading these to the public sector. A portion of that cost would then be born by business (as it is now when they pay Blue Cross or Manulife etc.) for provision of those benefits, while the balance would be funded through other revenues.

I would argue that enhances competitiveness. By lower the cost of doing business and in particular a cost payroll.

A modestly higher minimum wage is a negligible cost in the industries in question. Labour is 11% of the typical fast food cost structure, so a 10% increase in minimum wage in this sector represents a 1.1% increase in cost above inflation. Negligible and almost entirely offset by lower employee turnover costs. As a customer, your combo would rise a whopping 10c assuming 100% pass-through of costs; a burden this is not. Besides, lower poverty and social service costs ultimately reduce your tax bill.

Finally, on paid vacation, it has been shown that most Northern and West European workers, including Germans are typically more productive than that most Canadian labour; this has been traced, in part, to greater vacation time which leaves workers feeling more motivated and refreshed and able to accomplish more per hour in their non-vacation times.

So, no or very little net burden.